BTC Chattels

jewels.p

I know I did this in PTC but it always confuses me. When you are disposing of a Chattel that cost £3,200 and the proceeds are £7,500 is it the amount of gain you make ie £4,300 figure that you use to determine whether you restrict it to 5/3 (Proceeds - £6,000) or is it the actual proceeds figure of £7,500 that you use?

andrewtdk

You work them both out and compare the gain and go with the smallest. The 5/3 rule is there to help restrict the amount of tax that you have to pay which is calculated using the gain and not the profit

jewels.p

What I mean is, say the Proceeds were £6,500 but you had only made a gain of £1,000 do you restrict it as the Proceeds are above £6,000 or do you not restrict it as the gain is only £1,000. Which figure is it you are using to decide whether or not to restrict it?

I am not sure if I am writing it correctly what I am asking! :laugh:

jenny3549

It's the actual proceeds figure being above £6000 that causes the restriction, so it doesn't matter that the gain is only is less. So, for your figures:

5/3 x (7500-6000) = 2500 which is the figure you use, being less than the 4300.

Hope that makes sense!

andrewtdk

You would try the restriction where the proceeds are over £6000, the gain doesnt have to be over £6000 if thats what you mean.

So in the second example you used the gain would be £1000 but would be limited to (6500-6000)x5/3 giving a gain of £833.33

The restriction can be tryed for all chattels with proceeds over £6000 however with bigger proceeds the restriction is less likely to provide a lower gain.

Im not sure if this is what you meant but im sure someone else will be around soon if not

Edit: just seen someone else posted while i was typing but ill leave the post up anyway

jewels.p

Thanks you two that helps!

meibaker

hello, hope this will help
Cost over £6000, proceeds over £6000: Calc. gain as a Normal asset
Cost under £6000, proceeds under £6000: Exempt

Cost over £6000, proceeds under £6000: Proceeds deemed as £6000
Cost under £6000, proceeds over £6000:
Gain restricted to: 5/3(proceeds -£6000)

jewels.p

meibaker wrote: »

hello, hope this will help
Cost over £6000, proceeds over £6000: Calc. gain as a Normal asset
Cost under £6000, proceeds under £6000: Exempt

Cost over £6000, proceeds under £6000: Proceeds deemed as £6000
Cost under £6000, proceeds over £6000:
Gain restricted to: 5/3(proceeds -£6000)

I had this written down for PTC and still get confused! lol